Lack Of Financial Literacy Cost 15% Of Adults At Least $10,000 In 2022

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The problem, say experts, is the lack of knowledge can affect everything from how much you save — whether for emergencies or the long term (i.e., retirement) — to how much debt you take on and under what terms.

Some important financial decisions can emerge before you reach adulthood or soon after.

To name just a few: deciding how to pay for college, managing a credit card or auto loan, boosting your credit score, paying taxes, and starting to save for retirement despite it being decades away.

Financial literacy is ‘a key tool in the toolkit’

Advocates of financial literacy say the teaching needs to start before teens reach their high school graduation.

As of last year, 24 states require cation.

“There’s good data showing people make better decisions when personal finance coursework by grade 12, according to the nonprofit Council for Economic Edu- they have financial literacy,” said Nan Morrison, CEE president and CEO.

For example, Morrison said, you’ll likely have a better credit score and be less likely to default on a loan if you have some personal finance know-how.

A 2015 study from the Financial Industry Regulatory Authority’s Investor Education Foundation bears that out: Three years after personal finance education was implemented in Georgia, Texas and Idaho, all three states saw severe delinquency rates go down and credit scores rise.

Additionally, in 2021, individuals who scored above the median on a seven-question financial literacy quiz were more likely to make ends meet, according to the FINRA foundation’s latest financial-capability study. Specifically, they spent less than their income (53% versus 35%) and had three months’ worth of emergency funds at higher levels (65% versus 42%).

They also were more likely to have calculated their retirement savings needs (52% versus 29%) and to have opened a retirement account (70% versus 43%), according to the study.

“To me, the bottom line is that to live the life you want to live, you need to understand how to manage money,” Morrison said.

“It’s not the only important thing, but it’s a key tool in the toolkit.”

(Courtesy: https://www.cnbc. com/)